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Despite promises of “decentralization” and “trustless ownership,” the vast majority of crypto games today are, at best, partially decentralized. Web3 is the branding, but in reality, most are Web2+.Game assets live on-chain, yet the game logic, state and storage remain off-chain on centralized servers.

Why? Simply put, it’s not easy to build a fully decentralized game on-chain. Blockchains in 2023 are still far too slow for processing the gargantuan number of transactions that video games require. Lattice CEO Ludens tells Cointelegraph:

“Building a fully on-chain game right now is a little bit like building video games on a computer from the 1980s. We don’t yet have complex on-chain games yet because the blockchains – even Layer 2s – are not powerful enough right now.”

Furthermore, developers have to make important tradeoffs when using blockchain technology to make the game widely accessible to non-crypto audiences.

For instance, Aurory’s developers created a hybrid inventory system called Syncspace, which allows players to leave their assets in Aurory’s custody, but move them into their Solana wallets if they wish.



“Syncspace is Aurory’s UX strategy,” Julien Pellet, Aurory’s infrastructure technical director, tells Magazine. “Not every player wants to handle the complexities of a crypto wallet. We accepted that tradeoff by building Syncspace and allowed some assets to live off-chain in order to bring Aurory to a wider audience of non-crypto-native Web2 players”

But there are passionate communities of degens interested in full-fat, on-chain “autonomous worlds” that are built from the bottom up by the players. One group even modded a game to form a communist collective so everyone “won” the same. Autonomous worlds, as they’re sometimes known, face a lot of hurdles, but given the limitations, the early results are impressive.

Sky Strife from Lattice
Sky Strife from Lattice. (X/Twitter)

How Web3 games started

Web3 games are grappling with a bunch of other issues due to the brief history of the emerging sector. During the last crypto bull cycle, most blockchain games tried to be financial products first and video games second. 

That strategy helped catapult the play-to-earn gaming sector into brief mainstream prominence when token prices were going up. But unfortunately, if the appeal is based on delivering a financial return, then enthusiasm can disappear fast when token prices take a dive. 

Games like Axie Infinity, Pegaxy or Crabada, which once promised spectacular returns for players, have since fallen off a cliff. For Axie, unique active wallets peaked at around 700,000 in November 2021 but now tally more often in the eight to 10,000 range today.

The Metaverse Index (MVI) token, which tracks a collection of major gaming and metaverse tokens, is down 95.6% from its all-time high in November 2021.

MIT
The Metaverse Index token has been on a wild ride. (CoinMarketCap)

In response, Web3 games are now shunning the “play-to-earn” catchphrase that helped propel the sector to prominence, embracing phrases like “play-and-earn” or “play-and-own,” and deemphasizing the profits while focusing on benefits such as the ownership of game assets, or simply how fun the game is.

“At the end of the day, the core focus of games should be leisure and entertainment, not delivering a financial return,” Aurory’s backend tech director Jonathan Tang tells Magazine. 

“As Web3 game developers, our job is to think of how to leverage blockchain technology and what it brings to video gaming, while keeping the game fun as a priority.”

Some believe the emphasis on financial returns has tainted the industry’s image, not least due to an influx of scammers.

Pellet adds: “The last bull run attracted scammers that have multiple elaborate strategies such as cloned websites and fake projects to divert millions of dollars from legit players and teams. With Web2 games, it’s much harder to pull off those types of scams.”

Axie Infinity now has a much more finite number of players
Axie Infinity now has a much more finite number of players. (Axie Infinity)

Enter on-chain games

Encouragingly, however, a smaller community of builders interested in building autonomous worlds are trying to bring on-chain maximalism to blockchain games.

In contrast to their Web2.5 counterparts, fully on-chain games have their assets, and the game logic, state and storage live on-chain. The game state refers to the current status of the gaming world, such as player progression and the items they possess, while game logic simply refers to the rules of the game — how players move, interact, collect and consume. 

Why bother with having it all on-chain? Doing so ensures the game’s state is always immutable and transparent on the blockchain. But most importantly, it opens the door to the same kind of open composability that is possible in DeFi and enables an aggregator like the 1inch Network to build on top of Uniswap or Curve to integrate Synthetix and allow for cross-asset swaps. 

Composability allows anyone to build second-layer rules on top of the game’s original rules. Second-layer rules in fully on-chain games exist in the form of smart contracts on top of the core game developer’s original smart contracts. They are simultaneously experienced by all players in the game, unlike third-party mods in traditional gaming that simply alter the player’s local gaming experience.

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Collective action

Take, for example, the on-chain RPG Dark Forest, built on the Gnosis chain in 2019 by pseudonymous creator Gubsheep. Dark Forest saw groups of players in their own DAO (DFDAO) creating permissionless guild systems through external smart contracts. With the guild system, small players were able to overcome collective action problems in competing against big whale players by pooling their own in-game resources together. As DFDAO put it in its blog:

“Someone needs to beat orden_gg. Orden_gg has won twice in a row and is at the top of the leaderboard as we speak. If we band together for a collective victory, we can defeat Dark Forest’s unofficial raid boss together.”

Dark Forest is a decentralized MMO space conquest strategy game
Dark Forest is a decentralized MMO space conquest strategy game. (Medium)

DFDAO co-founder toe knee told Magazine: “The Astral Colossus (guild) was a mini game ‘above’ the core DF contracts, but in the eyes of the DF core contract, it was just another player. Instead of being an EOA account like everyone else, it was a smart contract with custom logic that shaped how it would behave differently. This contract was non-upgradeable and verified so players could confirm for themselves that we couldn’t change the rules and we couldn’t keep their planets after they donated.”

Dark Forest players have also created their own in-game marketplaces or even forked the game entirely onto a different chain/layer 2 — Gnosis Optimism. The new game – Dark Forest Arena – introduced new gaming modes previously unavailable.

Dark Forest
Dark Forest Arena.

Communist take over

Or take another on-chain game, OPCraft, a Minecraft-inspired experiment built by the Lattice team on Optimism. Weeks into the launch of the game, one player, calling himself SupremeLeaderOP, created a “communist society” where any player that opted into the guild would give up all their resources and share them with every other player in the society. 

These rules were not a social promise between players. They were binding and tied to an on-chain smart contract. SupremeLeaderOP could not, even if he so desired, rescind his promises to players or bend the rules of his communist guild. Some players saw the guild as a wacky fun experiment and immediately swore allegiance to the communist Republic, in the process, giving up all their in-game resources in return for access to the guild’s collective treasury. As documented on the Lattice blog: 

“Once a player had become a comrade, they were able to — through smart contracts that the Supreme Leader had deployed — mine material for the government treasury and build using treasury material on top of government owned land! The Republic even had a ‘social credit’ system to prevent freeloading comrades from spending more material from the treasury than they have contributed. Free loading comrades were not allowed to build anymore until they had ‘repaired their social credit’ through contributing their labor.”

In fully on-chain games, players can implement innovative changes rather than having to wait for a core developer to introduce the updates through a centralized patch. It’s a level of bottom-up spontaneous creative expression that extends far beyond how we traditionally think of video gaming, but in the Web2 world, experimenters tinkering around on custom game mods eventually spawned billion-dollar game franchises such as Dota and Counter-Strike. Dota was first created permissionlessly as a mod on Blizzard’s Warcraft 3 game, while Counter-Strike was birthed from a mod on Valve’s Half-Life game. 

The on-chain gaming space is nascent, and builders in this space still refer to fully on-chain games very differently. The popular autonomous worlds label was coined by Lattice Labs, but other builders in the on-chain space have referred to the concept as eternal games, infinite games or on-chain realities.

Although the terminology varies, the common denominator underlying these games is hard permanence on the blockchain. Just as smart contracts and tokens will forever exist on-chain, fully on-chain games remain fully uncensorable and alive long after a gaming studio abandons the game.

The tradeoff? Most on-chain crypto games currently resemble turn-based board games with simple game loops like Space Invaders and Pac-Man in the early era of video games.

Limitations, limitations, limitations

In creating the on-chain racing game Rhauscau, creator Stokarz tells Magazine he had to make a bunch of necessary tradeoffs in game design due to cost limitations.

“The reason why most on-chain games follow a traditional board game design with minimal game logic is because executing it all on-chain is inexpensive. On the smart contract level, it’s a one-dimensional play with agents simply changing the positioning of the play.”

Although Rhauscau is deployed on the layer-2 Arbitrum Nova, which boasts a throughput speed far higher than Ethereum mainnet, the game is still limited to simple game loops that last five minutes tops.

“The first tradeoff with Rhauscau’s game design was that it had to be centered around one simple game loop. Too complex games mean more transaction speeds, which would make it too costly for users to pay for it. It’s similar to early mobile games like Cut the Rope,” Stokarz added.

Partially decentralized Web2.5 games don’t face the same trade-offs as on-chain games because the only crypto layer within their games is assets in the form of nonfungible tokens. 

But they make an important sacrifice in another regard: the game’s open composability.

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Future of on-chain games

No one denies fully on-chain games face an uphill battle, and scalability isn’t the only problem.

Ludens emphasizes that the immature state of on-chain games is also due to game designers lacking a set of coherent guiding game design principles for building on blockchain ledgers. “Game designers should think harder about how to harvest the full affordances of a blockchain ledger in their game design.”

But blockchain and software infrastructure is an issue.

“On old video games, we saw simplistic text adventure games first. When computers got faster, then came FPS games like Doom. With higher computational power on the blockchain, it will further increase what we can do with game design.”

Games started as text based RPGs and moved on to first person shooters like Doom 1993
Games started as text-based RPGs and moved on to first-person shooters like Doom 1993. (Doom/Britannica)

“Getting chain infrastructure to a higher throughput would obviously help scale on-chain games greatly. It would allow sharding of the game’s state and executing it together on multiple chains at the same time.”

On the software side of things, he wonders what game engines like Lattice’s MUD (multi-user-dungeon) will look like years down the road. “Can MUD write powerful enough applications as we continue to push it?”

Today’s video game market is dominated by the Unreal and Unity game engines. Commercial game engines like Unreal only emerged in 1998 after decades of experimentation. Today, they serve as the go-to software framework for game developers to create a game efficiently with much less technical complexity.

MUD aims to achieve something similar for blockchain game developers. The software stack streamlines the task of building an EVM app with various development tools like an on-chain database.

On-chain and on ZK-rollups

Ethereum’s roadmap is built around scaling via ZK-rollups, and there’s a big opportunity on the various layer 2s for game designers to take advantage of faster and cheaper transactions. A small collection of builders on Starknet believe that the layer-2’s zero-knowledge proof native architecture is much better poised to scale a fully on-chain game.

Cartridge is building its own game engine called Dojo, among other developer tools for Starknet game developers. Its founder, Tarrance van As, believes that Starknet is the only one with a tractable path to scalability for hundreds of thousands of users eventually.

“With Dojo, game developers get a baseline capability of the framework because everything is provable all the time,” he tells Magazine.

“In the future, your game is not even going to be a layer 2 but a layer 3 or layer 4 on top of Starknet,” he says, referring to bespoke blockchain environments designed for specific types of applications that are built in another layer on top of the layer 2. But he adds ZK-proofs can even be generated on the same local PC running the gameplay.

“With ZK-proofs, you can even have logic computed on the client itself. We may even be able to run the game on our local device and simply provide the proofs that it was done correctly thanks to the mathematical integrity of ZK-tech.”

Van As sees a world of opportunity opening up and believes that in years to come, on-chain games will resemble blockchains a lot more than traditional AAA games. 

“On-chain games are free from the restrictions of traditional game publishers such as a financial runway, development cycle and its closed nature. They resemble Ethereum much more in the sense that it evolved from an emergent, bottom-up culture.”

Donovan Choy

Donovan Choy

Based in Singapore, Donovan Choy previously wrote about crypto for the Bankless newsletter. He published his first book ‘Liberalism Unveiled’ in 2021, an analysis of Singapore’s political economy. He enjoys satire, spaghetti Westerns and the Wu-Tang Clan.

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Starmer and Macron agree need for ‘new deterrent’ to stop small boat crossings

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Starmer and Macron agree need for 'new deterrent' to stop small boat crossings

Sir Keir Starmer and Emmanuel Macron have agreed the need for a “new deterrent” to deter small boats crossings in the Channel, Downing Street has said.

The prime minister met Mr Macron this afternoon as part of the French president’s state visit to the UK, which began on Tuesday.

High up the agenda for the two leaders is the need to tackle small boat crossings in the Channel, which Mr Macron said yesterday was a “burden” for both the UK and France.

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The small boats crisis is a pressing issue for the prime minister, given that more than 20,000 migrants crossed the English Channel to the UK in the first six months of this year – a rise of almost 50% on the number crossing in 2024.

Sir Keir is hoping he can reach a deal for a one-in one-out return treaty with France, ahead of the UK-France summit on Thursday, which will involve ministerial teams from both nations.

The deal would see those crossing the Channel illegally sent back to France in exchange for Britain taking in any asylum seeker with a family connection in the UK.

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However, it is understood the deal is still in the balance, with some EU countries unhappy about France and the UK agreeing on a bilateral deal.

French newspaper Le Monde reports that up to 50 small boat migrants could be sent back to France each week, starting from August, as part of an agreement between Sir Keir and Mr Macron.

A statement from Downing Street said: “The prime minister met the French President Emmanuel Macron in Downing Street this afternoon.

“They reflected on the state visit of the president so far, agreeing that it had been an important representation of the deep ties between our two countries.

“Moving on to discuss joint working, they shared their desire to deepen our partnership further – from joint leadership in support of Ukraine to strengthening our defence collaboration and increasing bilateral trade and investment.”

It added: “The leaders agreed tackling the threat of irregular migration and small boat crossings is a shared priority that requires shared solutions.

“The prime minister spoke of his government’s toughening of the system in the past year to ensure rules are respected and enforced, including a massive surge in illegal working arrests to end the false promise of jobs that are used to sell spaces on boats.

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“The two leaders agreed on the need to go further and make progress on new and innovative solutions, including a new deterrent to break the business model of these gangs.”

Chris Philp, the shadow home secretary, seized on the statement to criticise Labour for scrapping the Conservatives’ Rwanda plan, which the Tories claim would have sent asylum seekers “entering the UK illegally” to Rwanda.

He said in an online post: “We had a deterrent ready to go, where every single illegal immigrant arriving over the Channel would be sent to Rwanda.

“But Starmer cancelled this before it had a chance to start.

“Now, a year later, he’s realised he made a massive mistake. That’s why numbers have surged and this year so far has been the worst in history for illegal channel crossings.

“Starmer is weak and incompetent and he’s lost control of our borders.”

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Ex-Tory chairman Sir Jake Berry defects to Reform

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Ex-Tory chairman Sir Jake Berry defects to Reform

Ex-Tory chairman Sir Jake Berry has defected to Reform, in the latest blow to the Conservatives.

The former MP for Rossendale and Darwen, who served as Northern Powerhouse minister under Boris Johnson and lost his seat last year, said he had defected to Nigel Farage’s party because the Tories had “lost their way”.

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Reform UK confirmed the defection to Sky News, which was first broken by The Sun.

Speaking to the paper, Sir Jake said Mr Farage’s party was the “last chance to pull Britain back from terminal decline”.

“Our streets are completely lawless,” he said.

“Migration is out of control. Taxes are going through the roof.

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“And day after day, I hear from people in my community and beyond who say the same thing: ‘This isn’t the Britain I grew up in’.”

Sir Jake accused his former party of “abandoning the British people” but said he was not “giving up”.

“I’m staying. And I’m fighting.

“Fighting for the Britain I want my kids, and one day, my grandkids, to grow up in.”

Mr Farage welcomed what he said was “a very brave decision” by Sir Jake.

“His admission that the Conservative government he was part of broke the country is unprecedented and principled,” he added.

A Conservative Party spokesman said: “Reform support increasing the benefits bill by removing the two-child cap, and nationalising British industry. By contrast the Conservatives, under new leadership, will keep making the case for sound money, lower taxes and bringing the welfare bill under control.

“We wish Jake well in his new high spend, high tax party.”

Sir Jake’s defection to Reform comes just days after former Conservative cabinet minister David Jones joined Reform UK, which continues to lead in the polls.

European Research Group (ERG) chair Mark Francois (left), and deputy chair David Jones, speak to the media outside Portcullis House, Westminster
Image:
Former Welsh secretary David Jones (R) alongside Tory MP Mark Francois. Pic: PA

Mr Jones, who was MP for Clwyd West from 2005 until standing down in 2024, said he had quit the Tories after “more than 50 years of continuous membership”.

Sir Jake was the MP Rossendale and Darwen in Lancashire between 2010 and 2024, when he was defeated by Labour’s Andy MacNae.

He held several ministerial posts including in the Department for Housing, Communities and Local Government, Energy and Climate Change and the Cabinet Office.

Nigel Farage holds up six fingers to indicate the six votes his party's candidate won by in the Runcorn and Helsby by-election.
Pic: Reuters
Image:
Nigel Farage after winning the Runcorn and Helsby by-election.
Pic: Reuters

He was also chairman of the Conservative Party from September to October 2022, under Liz Truss.

Announcing his defection – which comes a year after the Tories suffered their worst ever election defeat – Sir Jake said “Britain was broken” and “the Conservative governments I was part of share the blame”.

“We now have a tax system that punishes hard work and ambition,” he said.

“Just this week, we saw record numbers of our brightest and best people leaving Britain because they can’t see a future here. At the same time, our benefits system is pulling in the world’s poor with no plan for integration and no control over who comes in.

“If you were deliberately trying to wreck the country, you’d be hard-pressed to do a better job than the last two decades of Labour and Tory rule.

“Millions of people, just like me, want a country they can be proud of again. The only way we get that is with Reform in government. That’s why I’ve resigned from the Conservative Party. I’m now backing Reform UK and working to make them the next party of government.”

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He added: “And with Nigel Farage leading Reform, we’ve got someone the country can actually trust. He doesn’t change his views to fit the mood of the day. And people respect that. So do I. That’s why I believe he should be our next prime minister.”

A Labour Party spokesperson said: “Not content with taking advice from Liz Truss, Nigel Farage has now tempted her Tory Party chairman into his ranks.

“It’s clear Farage wants Liz Truss’s reckless economics, which crashed our economy and sent mortgages spiralling, to be Reform’s blueprint for Britain. It’s a recipe for disaster and working people would be left paying the price.”

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Controversial welfare bill passes final Commons stage – but only after another concession

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Controversial welfare bill passes final Commons stage - but only after another concession

Sir Keir Starmer’s watered down welfare bill has passed its final stage in the Commons, after another concession was made to MPs.

The Universal Credit and Personal Independence Payments Bill passed by 336 votes to 242 on Wednesday night – a majority of 94.

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In a bid to thwart further opposition to the bill following last week’s climbdown, the government said it would not try to introduce any more reforms to personal independence payments (PIP) until a review by work and pensions minister Sir Stephen Timms on the assessment process has concluded.

Sir Stephen said he wanted to finish his review by next autumn, but that the government would not agree to complete the review in 12 months as some MPs wanted.

Marie Tidball, the Labour MP who had called for the 12-month limit, later signalled she was happy with the government’s compromise.

Ministers also agreed to her calls to have a majority of the taskforce looking at PIP to be disabled or from disability organisations, and for the outcome of the review to come before any PIP changes. It will also be voted on by MPs.

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A total of 47 Labour MPs have rebelled against the government to vote against its welfare reforms.

Mother of the House Diane Abbott, former minister Dawn Butler, Andy McDonald, Stella Creasy and Jonathan Brash were among those in the “no” lobby.

Meanwhile, MPs rejected a separate amendment by Green MP Sian Berry, which called for the basic rate of universal credit to increase by 4.8% above inflation each year until 2030.

A total of 39 Labour MPs voted for scrapping the clauses that halved Universal Credit for new claimants – the only major cut left in the bill after the government made its concessions.

The passing of the bill will come as a relief to Sir Keir Starmer, who last week was forced into a humiliating climbdown over his flagship welfare package in the face of significant opposition from his own MPs.

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Prior to the vote last Tuesday, the government offered significant concessions including exempting existing personal independence payment claimants (PIP) from stricter new criteria and only freezing and cutting the universal credit health top-up for new applications.

As the vote last week unfolded, it offered further confessions amid concerns the bill could be voted down – notably, that changes in eligibility for PIP would not take place until a review he is carrying out into the benefit is published in autumn 2026.

They ended up voting for only one part of the plan: a cut to Universal Credit (UC) sickness benefits for new claimants from £97 a week to £50 from 2026/7.

A total of 49 Labour MPs voted against the bill – the largest rebellion in a prime minister’s first year in office since 47 MPs voted against Tony Blair’s Lone Parent benefit in 1997, according to Professor Phil Cowley from Queen Mary University.

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